Employee retention refers to the extent an organisation keeps its employees. It can be measured as the proportion of employees who remain within the employ of an organisation and is expressed as a percentage of overall workforce numbers.
Employee turnover refers to the proportion of employees who leave an organisation over a set period (often on a year-on-year basis). At its broadest, the term is used to encompass all leavers, both voluntary and involuntary, including those who resign, retire or are made redundant.
Recent trends show that while voluntary turnover rates have decreased recently as a result of challenging economic conditions, the flip side of this coin is that redundancy-related turnover has become more common. Turnover levels can vary widely between occupations and industries. The highest levels are typically found in retailing, hotels, catering and leisure, manufacturing, call centres and among other lower paid private sector services groups.
Why is Employee Retention So Important?
Savings on Turnover Cost
The alternative to employee retention is employee turnover. A high turnover can prove to be very costly. This is because companies lose out on investments made in employees. For instance, hiring costs, training costs and material cost go down the drains when an employee walks out the door. According to the Society for Human Resources Management, “employee replacement costs can reach as high as 50 to 60 percent of an employee’s annual salary.”
Prevent loss of valuable knowledge and experience
When an employee leaves, they take with them valuable knowledge about your company, your customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized.
Increases Morale & Productivity
Employee turnover can spiral into more turnover as employees are left feeling disenchanted and apathetic; uninterested in the overall growth of the company. Rather than enjoy what they do and the atmosphere in which they work, employees are likely to seek alternate employment and this leads to a dip in morale and performance.
Disruption of Customer Service
Clients do business with a company in part because of the people. Relationships are developed that encourage continued patronage of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss.
Reputation Risk & Attraction to Potential Employees
Companies with high employee retention rates often enjoy good reputation, and this perception reflects on the goodwill such an organisation enjoys from the public. An organisation that has a notorious reputation for losing employees is more likely to have an unfavourable reputation, either among clients or potential employees. Companies with strong reputation for retaining its work force are often an applicant’s delight.
Strategies for Retaining Talent
According to the Industrial Accident Prevention Association, moderate workplace interventions can make significant improvements and shave off at least 20% of the costs associated with replacing lost staff.
Implementing intervention strategies that target employee engagement and encourage work-life balance will create positive work environment and strengthen employee’s commitment to the organization. Activities like team-builders and community involvement also increases morale and give employees a sense of unity. These strategies also prevent the need to offset employee replacement costs and reduces the indirect costs associated with decreased productivity and lost clients.
TalentBase Employee Benefits Option
Employees on TalentBase platform can purchase a wide variety of products at deep discounts and also enjoy the benefit of paying in instalments. This is another way of creating value to employees and avoid the exodus of good talent.
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